By Dr. James Philpot

Suppose a friend of yours has just died. You had previously agreed that when this time came, you would settle her estate. Once your initial shock and sadness passes, you might ask yourself, “Where do I begin?” In this column, we will consider an estate planning document that can help with this question — the financial inventory.

A financial inventory is a listing of all your financial accounts and contact persons. This listing can be an invaluable time saver for your executor (the person charged with carrying out a will’s terms) or, in the event of incapacity, your attorney-in-fact. A complete and current financial inventory will minimize the search for assets, liabilities, insurance policies and other items, saving time and money and ensuring that nothing is forgotten. In addition, the compilation of the financial inventory can help with lifetime financial planning by putting all of a person’s finances together in one view.

A well-constructed financial inventory will list the date it was compiled. It will also contain three types of information: accounts, papers and persons.

The accounts section of the financial inventory includes all financial accounts. These can be bank, brokerage, mutual fund, credit union, retirement pension and any other accounts. Liabilities like car notes, credit cards or mortgage or student loans should also be included. Very importantly, this section should also contain life, health, property and Social Security insurance information. For each item, it is common to list the name of the institution, the type of account, the account number and the institution’s contact information.

The papers section lists the location and description of important estate, financial and personal documents. Important estate documents can include the last will and testament, powers of attorney, trust instruments, marital agreements and military documents. A listing of real property deeds, tangible personal property titles and stock or other security certificates will typically also be included here. For each item, it is useful to list the location of the document and a brief description. For example, one item might read, “Prenuptial agreement — right desk drawer, filed under Marriage — limits wife’s claim to estate.”

Lastly, a financial inventory will include the names and contact information of persons who should be notified at your death. Your estate has an interest in notifying many persons, and many people do not regularly read obituaries, so this contact list will be helpful. In addition to distant friends and relatives, this list could include attorney(s), accountant(s), clergy, employer, former spouse(s) and other interested persons.

Once the financial inventory is completed, it should be stored carefully. The inventory should be kept in a place that can be accessed reasonably easily and quickly when needed. However, because the inventory contains significant and sensitive financial information, it should be stored in a place that is also secure. One or two well-trusted friends should know the location of your financial inventory and how it can be accessed.

Plenty of templates are available to guide the construction of your financial inventory. Two good online templates can be found at http://www.caringinfo.org/files/public/My_Financial_Inventory.pdf and at http://vanguard.com/pdf/amspfi.pdf .

This article appeared in the March 28, 2015 issue of the Springfield News-Leader.  It is available online here.

Dr. James Philpot, CFP is associate professor of finance at Missouri State University. Views expressed in this article reflect those of the author, have been distributed for educational and informational use only, and are not to be construed as legal advice.